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“UNITED METHODIST CHURCH” IS NOT A JURAL ENTITY WHICH CAN BE SUED IN THIS CHILD VICTIMS ACT LAWSUIT (SECOND DEPT).

The Second Department, in a full-fledged opinion by Justice Wan, reversing (modifying) Supreme Court, determined the “United Methodist Church” is not a jural entity which can be sued. In this Child Victims Act proceeding, the complaint alleged plaintiff was abused by an employee of the defendants United Methodist Church General Conference … , United Methodist Church Northeastern Jurisdiction New York-Connecticut District, New York Annual Conference of the United Methodist Church, United Methodist Church Long Island East District, Long Island East District of the New York Annual Conference of the United Methodist Church, … United Methodist Church of Woodbury New York. [and the] United Methodist Church … . The complaint alleged … United Methodist Church “is a not-for profit religious association and/or organization conducting business in the State of New York and organized and existing under the laws of the State of New York with its principal place of business located at c/o GFCA, 1 Music Circle North Nashville, Tennessee 37203.”

… [A]pplying neutral principles of law, we determine … the defendants established that United Methodist Church is not a jural entity with the capacity to be sued. Dismissal pursuant to CPLR 3211(a)(8) for lack of personal jurisdiction is warranted where a named defendant is not a legal entity amenable to suit … . New York law recognizes that “[a]n action or special proceeding may be maintained, against the president or treasurer” of an “unincorporated association” “upon any cause of action, for or upon which the plaintiff may maintain such an action or special proceeding, against all the associates, by reason of their interest or ownership, or claim of ownership therein, either jointly or in common, or their liability therefor, either jointly or severally” (General Associations Law § 13; see CPLR 1025 [“Two or more persons conducting a business as a partnership may sue or be sued in the partnership name, and actions may be brought by or against the president or treasurer of an unincorporated association on behalf of the association in accordance with the provisions of the general associations law”]). Although the term “unincorporated association” is not further defined by statute, New York courts have determined that “[i]t is only when a partnership has a President or a Treasurer that it is deemed an association within the meaning of” General Associations Law § 13 … . As such, “[a]n unincorporated association . . . has ‘no legal existence separate and apart from its individual members'” … .

* * * [W]e conclude that the defendants established that United Methodist Church … is a religious denomination with a single purpose—”to make disciples for Jesus Christ for the transformation of the world”—and not a jural entity amenable to suit as an unincorporated association. It is undisputed that United Methodist Church does not have a principal place of business, does not have its own offices or employees, and does not and cannot hold title to property, and there is no proof in the record that United Methodist Church has incorporated or held itself out as a jural entity in any other jurisdiction. Moreover, the defendants demonstrated at the hearing that United Methodist Church, as such, does not have any involvement in the staffing or the removal of clergy or staff at the local church level. Chestnut v United Methodist Church, 2024 NY Slip Op 03726, Second Dept 7-11-24

Practice Point: Here the “United Methodist Church” was deemed a nonjural entity which cannot be sued in New York–criteria explained in depth.

 

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WHERE A LAWSUIT AGAINST A UNION SEEKS INJUNCTIVE RELIEF, AS OPPOSED TO MONETARY DAMAGES, THE COMPLAINT NEED NOT ALLEGE EVERY MEMBER OF THE UNION RATIFIED THE CHALLENGED CONDUCT (CT APP).

The Court of Appeals, in a full-fledged opinion by Judge Garcia, determined the precedent (Martin v Curran (303 NY 276) prohibiting a lawsuit against a union (an unincorporated association) unless it was demonstrated every member of the union ratified the challenged action only applies when the lawsuit seeks monetary damages, not, as here, injunctive relief:

… [E]xtending [Martin v Curran (303 NY 276 [1951])] to bar union members from seeking any form of injunctive relief against a union, would have troubling implications. Respondents do not seriously dispute that, if Martin precludes petitioners’ claim here, union members would have no recourse to the courts even when incumbent union officials are allegedly manipulating elections to maintain power. Applying Martin to bar suits seeking to compel union officials to abide by their respective union constitutions and bylaws would have “far-reaching consequences” and risk “stifl[ing] all criticism” and democracy “within the union” … .

We therefore clarify that where, as here, union members seek only injunctive relief against the union and state no claim for pecuniary damages, the pleading is not governed by Martin and, as such, a plaintiff need not allege the participation of each individual member to bring a claim in accordance with General Associations Law § 13. The petition below was therefore improperly dismissed on that ground. Matter of Agramonte v Local 461, Dist. Council 37, Am. Fedn. of State, County & Mun. Empls., 2024 NY Slip Op 01332, CtApp 3-14-24

Practice Point: The complaint in a lawsuit against a union seeks injunctive relief, as opposed to monetary damages, the complaint need not allege that every member of the union ratified the challenged conduct.

 

 

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THE CONDOMINIUM BOARD OF MANAGERS PROPERLY APPLIED THE BUSINESS JUDGMENT RULE WHEN IT AUTHORIZED CONSTRUCTION WHICH NARROWED PLAINTIFF’S BOAT SLIP; THE DISSENT ARGUED THE BOARD FAILED TO SHOW THAT IT ACTED IN ACCORDANCE WITH THE CONDOMINIUM BYLAWS, WHICH IS REQUIRED BY THE BUSINESS JUDGMENT RULE (SECOND DEPT).

The Second Department, over a dissent, determined the defendant condominium board of managers properly applied the business judgment rule when it authorized construction which narrowed the boat slip assigned to plaintiff when she purchased the condominium:

“Under the business judgment rule, the court’s inquiry is limited to whether the board acted within the scope of its authority under the bylaws (a necessary threshold inquiry) and whether the action was taken in good faith to further a legitimate interest of the condominium. Absent a showing of fraud, self-dealing or unconscionability, the court’s inquiry is so limited and it will not inquire as to the wisdom or soundness of the business decision” … .

From the dissent:

Under the business judgment rule, a necessary threshold inquiry is whether the board acted within the scope of its authority under the bylaws and whether the action was taken in good faith to further a legitimate interest of the condominium … . Here, as set forth below, the Board failed to show, prima facie, that it satisfied this first prong—that it acted pursuant to the bylaws. Katz v Board of Mgrs. of Stirling Cove Condominium Assn., 2022 NY Slip Op 00033, Second Dept 1-5-22

 

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THE HOMEOWNERS’ ASSOCIATION ACTED WITHIN ITS AUTHORITY WHEN IT REQUIRED A HOMEOWNER TO TAKE DOWN A FENCE; HOWEVER THE AUTHORITY FOR THE HEAVY FINE (OVER $35,000) WAS NOT VALID PURSUANT TO THE REAL PROPERTY LAW (SECOND DEPT).

The Second Department, reversing (modifying} Supreme Court, determined that the homeowners’ association board (Fieldpoint) had the authority to require a homeowner to take down a fence and to fine the homeowner. However, the rule in effect at the time the fence was erected allowed only a one-time fine of $50.00. Supreme Court had awarded the homeowners’ association over $35,000. The amendment to the by-laws which provided for heavier fines was not incorporated in a recorded amended declaration as required by Real Property Law 339-u:

“‘In reviewing the actions of a homeowners’ association, a court should apply the business judgment rule and should limit its inquiry to whether the action was authorized and whether it was taken in good faith and in furtherance of the legitimate interests of the association'” … . Accordingly, a court should defer to the actions of a homeowners’ association board so long as the board acts for the purposes of the homeowners’ association, within the scope of its authority, and in good faith … .

… Fieldpoint established … that its actions in denying approval for the fence were protected by the business judgment rule … . In opposition to Fieldpoint’s prima facie showing, the plaintiffs failed to raise a triable issue of fact by submitting evidence that Fieldpoint acted “(1) outside the scope of its authority, (2) in a way that did not legitimately further the [interests of the association] or (3) in bad faith” … . Accordingly, the Supreme Court properly determined that Fieldpoint’s actions in denying approval for the fence were within the scope of its authority and taken in good faith. However, the court should have issued declarations to that effect rather than dismissing the causes of action seeking declarations to the contrary … . Ives v Fieldpoint Community Assn., Inc., 2021 NY Slip Op 05028, Second Dept 9-22-21

 

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IN THE CONTEXT OF A LAWSUIT BY THE BOARD MEMBERS OF AN UNINCORPORATED CONDOMINIUM ASSOCIATION AGAINST THE FORMER PRESIDENT OF THE BOARD, NEITHER THE REAL PROPERTY LAW (RPL) NOR THE BUSINESS CORPORATION LAW (BCL) APPLIES TO THE FORMER PRESIDENT’S DEMAND FOR ATTORNEY’S FEES ASSOCIATED WITH DEFENDING THE ACTION; THE BY-LAWS AND THE COMMON LAW RULE THAT THE PARTIES ARE RESPONSIBLE FOR THEIR OWN ATTORNEY’S FEES CONTROL (FIRST DEPT).

The First Department, in a full-fledged opinion by Justice Gische, reversing Supreme Court, in a matter of first impression, determined the defendant, the former president of the condominium board, is not entitled to indemnification (attorney’s fees) for her costs in defending a lawsuit brought by the board of managers of the unincorporated condominium association. The lawsuit alleged defendant misappropriated the insurance proceeds paid after a fire in the condominium building. The First Department held the by-laws and the common law rule that the parties are responsible for their own attorney’s fees control. The court rejected the application of provisions of the Real Property Law (RPL) and the Business Corporation Law (BCL) with respect to indemnification in the context of an unincorporated condominium association:

Neither the common law, nor BCL § 624(e) by analogy, provide the right to recoup attorney’s fees to a board member successfully defending against a derivative action. BCL § 626(e) is not an indemnification provision. Rather, it permits legal fees to be paid to an owner who successfully asserts the interest of an entity “when the management of the entity fails to act to protect that interest” … . Consequently, “an award of attorneys’ fees in a shareholders’ derivative suit is to reimburse the plaintiff for expenses incurred on the corporation’s behalf” … . The corporation is responsible for paying the legal fees, but only where the corporation benefits from the litigation … . Neither the BCL nor the common law provide a board member with a reciprocal right to recover legal fees for defending against an unsuccessful derivative action, at least not in the absence of such authorization in the bylaws or some other statutory authority. In this respect, …

In the absence of any authority permitting [defendant] to recoup her legal fees, the general common law rule applies, that “attorney’s fees are incidents of litigation and a prevailing party may not collect them from the loser unless an award is authorized by agreement between the parties, statute or court rule” … . [Defendant], alone, is responsible for her legal fees. Board of Mgrs. of the 28 Cliff St. Condominium v Maguire, 2020 NY Slip Op 06844, First Dept 11-19-20

 

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SUPREME COURT SHOULD NOT HAVE GRANTED SUMMARY JUDGMENT FINDING THAT THE VALUE OF COMMON AREAS OF A DEVELOPMENT OWNED AND MAINTAINED BY PETITIONER HOMEOWNERS’ ASSOCIATION WAS ZERO FOR PROPERTY TAX PURPOSES BECAUSE OF ENCUMBRANCES AND RESTRICTIONS, QUESTIONS OF FACT ABOUT THE VALUE OF THE COMMON AREAS HAD BEEN RAISED (THIRD DEPT).

The Third Department, reversing Supreme Court, determined questions of fact precluded summary judgment finding that the value of the common areas of a development owned and maintained by petitioner homeowners’ association was zero because of encumbrances and restrictions on the property. Petitioner sought a reduction of the tax assessments pursuant to Real Property Tax Law (RPTL)  article 7. The town and the village had assessed the value of the common areas in the millions of dollars:

… [T]he declaration of protective covenants purports to impose a servitude upon the common area parcels in the nature of an easement or covenant that runs with the land; however, petitioner’s bylaws specifically state that individual lot owners “shall have a license to use the [c]ommon [a]reas.” To the extent that the corresponding deeds to the individual lot owners recite that each conveyance was made subject to both the declaration of protective covenants and petitioner’s bylaws, we now reiterate that “[s]uch a conflict in terminology does not lend itself to summary relief” … . …

… [P]etitioner failed to demonstrate, as a matter of law, that the assessed property values of the individual lot owners within the development already include an enhanced value or premium sufficient to cover or offset the value of petitioner’s common area parcels. …

Nor did petitioner sufficiently establish that the subject common area parcels have zero or only nominal value. Indeed, “[i]t is possible that a parcel is so interwoven with a dominant estate that it has no extrinsic value that is available for tax purposes. If, however, it is shown that a servient parcel[, i.e., the common area parcels,] has substantial value, the land can be taxed despite its relationship to a dominant estate owned by a member of a community development” … . Matter of The Assn. of Prop. Owners of Sleepy Hollow Lake, Inc. v McBride, 2019 NY Slip Op 05371, Third Dept 7-3-19

 

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COVENANT TO BUILD A WALKWAY LINKING PARTS OF A RESIDENTIAL COMMUNITY RAN WITH THE LAND AND WAS THEREFORE ENFORCEABLE BY THE HOMEOWNERS ASSOCIATION AGAINST A SUBSEQUENT PURCHASER OF THE PROPERTY (SECOND DEPT).

The Second Department, reversing Supreme Court, determined that the plaintiff homeowners association (HOA) was entitled to enforce an agreement made with the prior owners of the residential community to construct a walkway linking the newly constructed area to the existing areas of the community. The walkway covenant was deemed to run with the land:

As stated by the Court of Appeals, “[i]n Neponsit [Neponsit Prop. Owners’ Assn. v Emigrant Indus. Sav. Bank, 278 NY 248] we articulated three conditions . . . that must be met in order for a covenant to run with the land: (1) it must appear that grantor and grantee intended that the covenant should run with the land; (2) it must appear that the covenant is one touching or concerning the land with which it runs; [and] (3) it must appear that there is privity of estate between the promisee or party claiming the benefit of the covenant and the right to enforce it, and the promisor or party who rests under the burden of the covenant” … . …

The contract entered into in 2000, and the 2002 Amendment, as well as the circumstances of the transaction, demonstrate that the grantor and grantee intended that the walkway covenant should run with the land, thus satisfying the first Neponsit condition … . Indeed, the walkway covenant was expressly deemed an “inducement” for the HOA to sell the property … . …

The second Neponsit condition, that the walkway covenant touches and concerns the land, is easily met here, since the walkway covenant requires construction of a walkway linking the property with the Bay Street Landing community, and construction of common amenities. Thus, it “directly affects the uses to which the land may be put and substantially affects its value” … .

The third Neponsit condition is satisfied by the undisputed facts establishing the requisite privity  … . Bay St. Landing Homeowners Assn., Inc. v Meadow Partners, LLC, 2019 NY Slip Op 01384, Second Dept 2-27-19

 

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NAMING THE PRESIDENT OF AN UNINCORPORATED ASSOCIATION AS A DEFENDANT PROPERLY JOINED THE ASSOCIATION.

The Second Department determined an association was properly sued by naming the president as a defendant. An unincorporated association cannot sue or be sued solely in the association name:

An unincorporated association such as the Condominium has “no legal existence separate and apart from its individual members” (Vincent C. Alexander, Practice Commentaries, McKinney’s Cons Laws of NY, Book 7B, CPLR C1025:2 at 341). “Unlike a partnership, an unincorporated association may not sue or be sued solely in the association name” … . General Associations Law § 13 provides:

“An action or special proceeding may be maintained, against the president or treasurer of such an association, to recover any property, or upon any cause of action, for or upon which the plaintiff may maintain such an action or special proceeding, against all the associates, by reason of their interest or ownership, or claim of ownership therein, either jointly or in common, or their liability therefor, either jointly or severally.”

Thus, by commencing the action against Fogarty, as president of the Condominium, the plaintiffs joined the Condominium … . Pascual v Rustic Woods Homeowners Assn., Inc., 2015 NY Slip Op 09415, 2nd Dept 12-23-15

CIVIL PROCEDURE (UNINCORPORATED ASSOCIATION PROPERLY JOINED BY NAMING PRESIDENT AS DEFENDANT)/ASSOCIATIONS (UNINCORPORATED ASSOCIATION PROPERLY JOINED BY NAMING PRESIDENT AS DEFENDANT)

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The Martin Rule, Which Prohibits Actions Against Unincorporated Associations Unless the Actions Complained of Were Authorized or Ratified, Does Not Prohibit Actions Against Individual Association Members

The Second Department, over a dissent, determined that, although the Martin rule prohibited the “defamation/tortious interference with business relations” actions against the union, the actions against individual union members were not prohibited.  The Martin rule bars suit against unincorporated voluntary membership associations (here the union) unless the actions complained of were authorized or ratified by the union. But the Martin rule does not bar suit against union members in their individual capacities:

… [T]he Martin rule (see Martin v Curran, 303 NY 276…) … bars all actions against an unincorporated voluntary membership association, and bars claims against the officers of such an association in their representative capacities where there is no allegation that the members of the association authorized or ratified the wrongful conduct complained of.

However, neither the Martin rule nor any other authority precludes causes of action from being asserted against individual members of the union defendants in their individual capacities … . In Martin, only the claims asserted against union members in their representative capacities as officers of the union were dismissed. Notably, the Court of Appeals specifically allowed the libel claims in that action to proceed against the same defendant union members, in their individual capacities … . Cablevision Sys. Corp. v Communications Workers of Am. Dist. 1, 2015 NY Slip Op 06873, 2nd Dept 9-23-15

 

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Suit Against an Unincorporated Association Must Allege Every Member of the Association Ratified the Conduct Complained Of

In affirming the dismissal of a cause of action against unions brought by a probationary teacher who had been terminated, the Second Department noted that a suit against an unincorporated association must allege that the conduct complained of was ratified by every member of the association:

The Supreme Court … properly granted the union defendants’ cross motion pursuant to CPLR 3211(a) to dismiss the amended complaint insofar as asserted against them. Because the union defendants were unincorporated associations, and because the amended complaint failed to allege that the conduct complained of on the part of the union defendants was authorized or ratified by every one of their respective members, the amended complaint failed to state a cause of action against the union defendants … . Sweeny v Millbrook Cent. Sch. Dist., 2015 NY Slip Op 06331, 2nd Dept 7-29-15

 

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